Biz2Credit Identifies 2014's Best Small Business Cities in America

Analysis Examined Markets with the Highest Annual Revenue, Credit Scores and Other Factors

Biz2Credit has identified San Jose as the Best Small Business City in America, based on a weighted average that includes annual revenue, credit score, age of business (in months), cash flow, debt-to-income ratio, incorporation (C-Corp or LLC vs. sole proprietorship), and business owners' personal credit scores.

"San Jose remains the center of innovation and new business job creation in the U.S.," said Biz2Credit CEO Rohit Arora, one of the nation's leading experts in small business finance, who oversaw the research. "Surprisingly, Detroit-Dearborn scored very well in large part because of the auto industry's rebound and the growing technology sector in the area."

Meanwhile, despite being the nation's financial hub and a city with a thriving economy, the New York City metro area ranked only seventh in the Biz2Credit's Best Small Business Cities ranking because of the high cost of doing business.

"While revenue figures are usually higher for New York-based companies, so are the costs of operation. The minimum wage is higher, and now Mayor DeBlasio has expanded paid sick leave. This hinders small business owners," Arora explained. "When fixed and marginal costs are high, it impacts cash flow significantly. There is also some fallout still from Hurricane Sandy and its impact on small businesses. This, too, hurt New York's ranking."

Houston dropped from the top spot last year. The oil boom in Texas has slowed a little, and business growth is not at the pace that we saw last year.

For this analysis, Biz2Credit defined "small businesses" as companies having fewer than 250 employees or less than $10 million in annual revenues. The Top 25 Cities for Small Business in 2014 are:

"Centers of technological innovation are booming. Cities like Portland and Jacksonville are taking advantage of their slower pace, lower costs and good standard of living offered to residents," Arora says.

When sorted by Age of Business (in months), Philadelphia was the leader.

Top 25 Metro areas with the highest applications in 2013

Average Annual Revenue

Average Credit Score

Average of Age in Months

Average BizAnalyzer Score

Philadelphia-Camden-Wilmington, PA-NJ-DE-MD

$216,435

621

25.7

47.7

San Antonio-New Braunfels, TX

$197,535

617

29.3

49.4

Sacramento--Roseville--Arden-Arcade, CA

$419,636

635

32.1

51.7

Orlando-Kissimmee-Sanford, FL

$195,413

616

33.6

47.6

Washington-Arlington-Alexandria, DC-VA-MD-WV

$224,982

629

34.9

52.5

Dallas-Fort Worth-Arlington, TX

$374,996

622

35.2

49.9

Seattle-Tacoma-Bellevue, WA

$341,051

603

36.6

49.0

Jacksonville, FL

$800,638

612

36.7

48.2

Portland-Vancouver-Hillsboro, OR-WA

$1,007,506

634

37.0

50.1

Houston-The Woodlands-Sugar Land, TX

$240,033

631

37.8

50.7

Detroit-Warren-Dearborn, MI

$730,013

637

39.4

55.5

Las Vegas-Henderson-Paradise, NV

$497,677

649

39.4

53.6

Tampa-St. Petersburg-Clearwater, FL

$210,676

635

40.4

51.9

Chicago-Naperville-Elgin, IL-IN-WI

$541,797

632

42.4

50.5

Atlanta-Sandy Springs-Roswell, GA

$384,282

623

45.4

52.5

Riverside-San Bernardino-Ontario, CA

$1,215,845

602

45.5

52.1

Denver-Aurora-Lakewood, CO

$482,434

649

46.0

55.1

Charlotte-Concord-Gastonia, NC-SC

$305,051

601

46.6

49.4

Miami-Fort Lauderdale-West Palm Beach, FL

$375,856

625

46.9

52.2

Indianapolis-Carmel-Anderson, IN

$245,311

607

47.1

51.5

New York-Newark-Jersey City, NY-NJ-PA

$574,801

637

47.3

52.6

San Francisco-Oakland-Hayward, CA

$274,164

637

51.9

53.7

Phoenix-Mesa-Scottsdale, AZ

$230,795

624

53.2

49.8

Los Angeles-Long Beach-Anaheim, CA

$752,154

641

58.6

53.9

San Jose-Sunnyvale-Santa Clara, CA

$499,811

685

67.4

57.7

National Average

$372,202

623

59.7

46.5

"The small number of months in business indicates more startups in an area. Philadelphia, San Antonio, Sacramento, and Orlando were among the leaders. These cities are places where immigrant businesses are growing," Arora explained. "Meanwhile, Washington benefits from Federal investments. The city also is a magnet for young people."

When sorted by Credit Score, San Jose was the leader. Rounding out the Top 25 were: Denver, Las Vegas, Los Angeles-Anaheim, San Francisco-Oakland, San Jose, New York metro, Detroit-Dearborn, Tampa-St. Petersburg, Sacramento, and Portland.

Top 25 Metro areas with the highest applications in 2013

Average Annual Revenue

Average Credit Score

Average of Age in Months

Average BizAnalyzer Score

San Jose-Sunnyvale-Santa Clara, CA

$499,811

685

67.4

57.7

Denver-Aurora-Lakewood, CO

$482,434

649

46.0

55.1

Las Vegas-Henderson-Paradise, NV

$497,677

649

39.4

53.6

Los Angeles-Long Beach-Anaheim, CA

$752,154

641

58.6

53.9

San Francisco-Oakland-Hayward, CA

$274,164

637

51.9

53.7

New York-Newark-Jersey City, NY-NJ-PA

$574,801

637

47.3

52.6

Detroit-Warren-Dearborn, MI

$730,013

637

39.4

55.5

Tampa-St. Petersburg-Clearwater, FL

$210,676

635

40.4

51.9

Sacramento--Roseville--Arden-Arcade, CA

$419,636

635

32.1

51.7

Portland-Vancouver-Hillsboro, OR-WA

$1,007,506

634

37.0

50.1

Chicago-Naperville-Elgin, IL-IN-WI

$541,797

632

42.4

50.5

Houston-The Woodlands-Sugar Land, TX

$240,033

631

37.8

50.7

Washington-Arlington-Alexandria, DC-VA-MD-WV

$224,982

629

34.9

52.5

Miami-Fort Lauderdale-West Palm Beach, FL

$375,856

625

46.9

52.2

Phoenix-Mesa-Scottsdale, AZ

$230,795

624

53.2

49.8

Atlanta-Sandy Springs-Roswell, GA

$384,282

623

45.4

52.5

Dallas-Fort Worth-Arlington, TX

$374,996

622

35.2

49.9

Philadelphia-Camden-Wilmington, PA-NJ-DE-MD

$216,435

621

25.7

47.7

San Antonio-New Braunfels, TX

$197,535

617

29.3

49.4

Orlando-Kissimmee-Sanford, FL

$195,413

616

33.6

47.6

Jacksonville, FL

$800,638

612

36.7

48.2

Indianapolis-Carmel-Anderson, IN

$245,311

607

47.1

51.5

Seattle-Tacoma-Bellevue, WA

$341,051

603

36.6

49.0

Riverside-San Bernardino-Ontario, CA

$1,215,845

602

45.5

52.1

Charlotte-Concord-Gastonia, NC-SC

$305,051

601

46.6

49.4

National Average

$372,202

623

59.7

46.5

"Small businesses in areas where technology is booming, such as San Jose, Denver, Las Vegas, Los Angeles, San Francisco, and New York, tend to have higher credit scores," Arora said. "They are also areas with a long history of innovation and thus have well-established companies with higher credit scores."

About the Biz2Credit Best Small Business Cities in America Study

Biz2Credit analyzed 12,000 businesses with less than 250 employees and less than $10 million in annual revenues from across the country that have been in operation for more than 1 year.